PWR WACC - Weighted Average Cost of Capital

The WACC of Quanta Services Inc (PWR) is 10.5%.

The Cost of Equity of Quanta Services Inc (PWR) is 11.15%.

The Cost of Debt of Quanta Services Inc (PWR) is 4.45%.

	Range	Selected
Cost of equity	9.80% - 12.50%	11.15%
Tax rate	22.00% - 23.00%	22.50%
Cost of debt	4.00% - 4.90%	4.45%
WACC	9.2% - 11.8%	10.5%

WACC

PWR WACC calculation

Category	Low	High

Long-term bond rate	3.9%	4.4%
Equity market risk premium	4.6%	5.6%
Adjusted beta	1.28	1.36

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.80%	12.50%

Tax rate	22.00%	23.00%
Debt/Equity ratio	0.09	0.09
Cost of debt	4.00%	4.90%

After-tax WACC	9.2%	11.8%


Selected WACC	10.5%

PWR's CAPM model and how its cost of Equity is calculated

The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.

This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.

Here’s how we figure out the cost of equity for PWR:

cost_of_equity (11.15%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.28) + risk_adjustments (0.25%)

We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.